Correlation Between CVR Energy and Baker Hughes
Can any of the company-specific risk be diversified away by investing in both CVR Energy and Baker Hughes at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CVR Energy and Baker Hughes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVR Energy and Baker Hughes Co, you can compare the effects of market volatilities on CVR Energy and Baker Hughes and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CVR Energy with a short position of Baker Hughes. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Baker Hughes.
Diversification Opportunities for CVR Energy and Baker Hughes
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CVR and Baker is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and Baker Hughes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baker Hughes and CVR Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CVR Energy are associated (or correlated) with Baker Hughes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baker Hughes has no effect on the direction of CVR Energy i.e., CVR Energy and Baker Hughes go up and down completely randomly.
Pair Corralation between CVR Energy and Baker Hughes
Assuming the 90 days trading horizon CVR Energy is expected to under-perform the Baker Hughes. In addition to that, CVR Energy is 1.67 times more volatile than Baker Hughes Co. It trades about -0.01 of its total potential returns per unit of risk. Baker Hughes Co is currently generating about 0.05 per unit of volatility. If you would invest 3,034 in Baker Hughes Co on September 3, 2024 and sell it today you would earn a total of 1,301 from holding Baker Hughes Co or generate 42.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.08% |
| Values | Daily Returns |
CVR Energy vs. Baker Hughes Co
Performance |
| Timeline |
| CVR Energy |
| Baker Hughes |
CVR Energy and Baker Hughes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVR Energy and Baker Hughes
The main advantage of trading using opposite CVR Energy and Baker Hughes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy position performs unexpectedly, Baker Hughes can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Baker Hughes will offset losses from the drop in Baker Hughes' long position.| CVR Energy vs. Compagnie Plastic Omnium | CVR Energy vs. Pfeiffer Vacuum Technology | CVR Energy vs. Spirent Communications plc | CVR Energy vs. Alfa Financial Software |
| Baker Hughes vs. Abingdon Health Plc | Baker Hughes vs. Schroders Investment Trusts | Baker Hughes vs. Universal Health Services | Baker Hughes vs. Aberdeen Diversified Income |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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